Samsung Electronics has slashed its quarterly profit forecast due to the scrapping of its Note 7 smartphone.
The
South Korean firm now expects third quarter profits of 5.2tn won
($4.7bn; £3.8bn), which is a third lower than its original estimate of
7.8tn won.
The Note 7 was recalled last month after battery fires,
but after replacement phones experienced the same problem, Samsung
scrapped the device.
Ahead of the profit warning, Samsung shares fell 0.8% on Wednesday.
That added to Tuesday's 8% fall.
The company has seen more than $20bn wiped off its market value in two days.
Samsung's
shares have fallen on concerns that the current crisis will go beyond
the costs of the recall and affect the brand's overall reputation.
Analysts are suggesting
the Note 7 crisis could cost Samsung in the long run, particularly
coming just as rivals, such as Google and Apple, have announced new
high-end smartphones.
The Note 7 had been seen as the main rival
to Apple's new iPhone 7 model. Samsung's woes have sent Apple's shares
to a 10-month high.
In September, Samsung recalled around 2.5 million phones after complaints of exploding batteries.
It
later insisted that all replaced devices were safe. However, that was
followed by reports that those phones were catching fire too.
But on Tuesday, the company said it would permanently cease production of the device and urged owners to turn it off.
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